Contingent Asset Smart Contracts for Reliable Risk-Based Valuation
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Solution Overview
Problem
Existing computer systems lack efficient methods for representing and managing contingent assets, particularly in transactions where asset valuation is subject to contingencies, such as receivables or stock assets with uncertain future liabilities.
Innovation Solution
A computing system that utilizes a blockchain-based framework to authenticate, evaluate, and facilitate the sale of contingent assets by determining risk levels, negotiating listings, and managing transactions, including the use of smart contracts to ensure secure and transparent asset transfers.
Engineering Contradictions & Design Principles
Engineering Contradiction Analysis
1Reliability
If traditional asset transaction methods are used for contingent assets, then the system is simple to operate, but the reliability and transparency of asset valuation is insufficient due to uncertainty in future liabilities
Solution Approach 1:
The patent introduces a computing entity as an intermediary that facilitates transactions between sellers and buyers of contingent assets. This intermediary authenticates assets, determines risk levels, and manages the transaction process, thereby improving valuation reliability without requiring direct complex interactions between all parties. The intermediary implements smart contracts and risk assessment mechanisms that enhance trust while maintaining operational simplicity for end users.
Solution Approach 2:
The patent performs preliminary authentication and risk level determination of contingent assets before they are listed for sale. By pre-assessing the credibility of sellers, the authenticity of assets, and the risk levels associated with contingent liabilities, the system establishes a foundation of reliability before transactions occur. This preliminary action includes verifying seller identities, authenticating asset documentation, and calculating risk metrics in advance of actual trading.
2Reliability
If risk assessment and smart contracts are implemented to ensure secure transactions, then transaction security is improved, but the ease of operation decreases due to additional authentication and evaluation steps
Solution Approach 1:
The patent implements self-service mechanisms where sellers can list their own contingent assets after initial authentication, and buyers can independently evaluate listings using standardized risk metrics. The smart contracts automatically execute transaction terms without requiring manual intervention for each step. This self-service approach maintains high security through automated verification while reducing the operational burden on users, as the system handles complex authentication and risk assessment procedures automatically.
3Measurement precision
If comprehensive authentication and risk determination processes are used, then the precision of asset valuation is improved, but the time required for transaction completion increases
Solution Approach 1:
The patent performs comprehensive authentication and risk level determination as preliminary actions before assets are listed for sale. By completing seller verification, asset authentication, and initial risk assessment in advance, the system establishes precise valuation metrics that can be quickly referenced during actual transactions. This preliminary processing ensures high valuation precision while minimizing time delays during the trading phase, as the heavy lifting of verification has already been completed.
Solution Approach 2:
The patent implements dynamic risk level determination that updates asset valuations based on changing conditions and new information. The system can adjust risk metrics and valuation precision in real-time based on market conditions, seller performance history, and evolving contingent liability scenarios. This dynamic approach allows the system to maintain high precision when necessary while reducing assessment intensity when conditions are stable, thereby optimizing transaction speed without sacrificing valuation accuracy.
Data Source
AI summary
A method includes an object owner computing entity issuing a digital record representing a contingent asset to a marketplace computing entity that identifies an asset authenticity computing entity. The method further includes the asset authenticity computing entity generating authenticity information associated with the contingent asset and the marketplace computing entity determining that an authenticity indicator is the same as a lifecycle status indictor of the digital record. The method further includes the marketplace computing entity generating a smart contract to indicate availability of the contingent asset to include available terms and the authenticity indicator and obtaining a portion of a copy of an object distributed ledger. The method further includes the marketplace computing entity causing inclusion of a next block on the object distributed ledger that includes the smart contract to represent the contingent asset.